The Five Biggest Mistakes Most Challenger Brands Make

Justin Daab

While there are now so many more opportunities to reach customers than there were only ten years ago, the expansion of options has made decisions on how to improve returns on a limited budget much more complicated. To simplify things, we compiled a shortlist of the five most common mistakes challenger brands make in navigating this complexity. Is your brand guilty of any of the following mistakes?

Positioning the brand relative to the market leader

For many challenger brands, it is tempting to think that screaming “us too!” louder than your competition will be enough to steal share from the market leader. It may to a small extent if there is a visible price difference, but usually it won’t without their making a dramatic sacrifice in margin or risking swift retaliation. Challenger brands that gain the greatest long-term success define a narrow position around an idea that offers customers an affiliation, experience, or advantage found nowhere else in the market. By doing so, challenger brands avoid price comparisons and command a premium for their offerings.

Trying to swallow the elephant whole

Challenger brands, eager for results, often mistakenly think that increasing their market share requires broadening their target audience. The truth, however, is that pursuing a broader target audience only increases competition. This mistake is the conjoined twin of the positioning mistake outlined above. Trying to serve all of the people all of the time inevitably leads to compromised positioning, an overly complex offering, a confused consumer base, or all of the above.

Fighting on too many fronts

Too often, challenger brands succumb to the temptation of spreading media dollars across a large number of outlets in an attempt to reach all customers, everywhere, all of the time. However, it is generally smarter to maximize your share of voice and create a unique customer experience within a limited number of outlets. Prioritize your media choices against a more limited, high-opportunity customer segment to establish a dominant presence within those highest-priority media outlets. You can convert more sinners by preaching in a church than by speaking quietly on a busy street corner.

Expecting reward without risk

For challenger brands’ shares to grow, their returns must exceed the market’s as a whole. As with any investment, realizing better-than-average returns from marketing spend usually requires taking higher-than-average risks. We aren’t advocating reckless abandon or faith in hunches but rather a continuous appetite for setting aside a portion of the budget set for taking calculated risks and testing hypotheses as evaluated by metrics. Unexpected opportunities won’t uncover themselves.

Aiming for #1 share

Let’s look at many branders’ favorite company, Apple, for a moment. The iPhone has a sub–20 percent share of the smartphone market, yet Apple extracts more than 90 percent of the industry’s profits. Given their incredible success, it’s hard to look at Apple as a challenger brand, but in truth, that is exactly how they entered the mobile market. By avoiding the pitfalls listed above, they managed to become the largest, most profitable company in the world.

Magnani is an advertising agency that helps challenger brands amplify and accelerate their marketing initiatives.

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Magnani is an experience design and strategy firm that crafts transformational digital experiences to delight users and deliver sustainable competitive market advantages for our clients.


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